Philippine Peso, Bonds Decline as Greece Debt Deal Threatened

Nov. 2 (Bloomberg) -- The Philippine peso and government
bonds slid on concern a Greek referendum on Europe’s aid plan
could result in a default, prompting investors to sell emerging-market assets.

The MSCI Asia Pacific Index of regional stocks dropped for
a third day after Greek Prime Minister George Papandreou
announced his desire to put the rescue pact to a national vote.
Higher capital charges on non-deliverable currency forwards may
help curb gains in the peso, central bank Governor Amando
Tetangco said yesterday.

“Europe’s debt crisis continues to influence currencies
worldwide because people are worried about the success of the
rescue plan,” said Rafael Algarra, executive vice president at
Security Bank Corp. in Manila. “We will remain volatile as the
news comes out from Europe.”

The peso dropped 0.4 percent to 42.78 per dollar as of the
4 p.m. close in Manila, according to Tullett Prebon Plc. It
earlier fell as much as 0.8 percent. Financial markets were shut
in the Philippines on Oct. 31 and Nov. 1 for holidays.

Bangko Sentral ng Pilipinas will increase the risk-weight
charge on NDFs with a “net-open position” to the equivalent of
a capital adequacy ratio of 15 percent from 10 percent,
effective 2012, it said in a statement last week.

The yield on the government’s 5.875 percent bonds due
January 2018 surged 16 basis points, or 0.16 percentage point,
to 5.1 percent, according to Tradition Financial Services.

The government may cancel a plan to sell $500 million of
overseas debt and is keeping its domestic borrowing plan for
this year, Treasurer Roberto Tan told reporters in Manila today.